Busher Was Right On LTC Artificial Impoverishment
To The Editor:
Re: "Dont Use Joint Annuities for LTC Artificial Impoverishment," by Carroll Busher in the August 19, 2002 issue of National Underwriter.
Carroll Busher is exactly right: Medicaid only pays for the one place our clients do not want to plan to go: a nursing home. And a semi-private room in a welfare-financed bed at that! Most of the ads and handouts for this immediate annuity scheme suggest this, but it is a sin of omission, failing to tell prospects what they cannot get under Medicaid: Home care, adult day care and assisted living.
But we have to separate those who are already in a long-term care crisis today, and those who are still healthy and want to make plans to protect their assets from the high cost of care in the future.
For people already in crisis, applying for Medicaid benefits right now, this immediate annuity technique does work in many states. These people have few options. I do not begrudge this currently legal strategy to these clients with the advice and input of a qualified elder law attorney. But I cannot recommend (and no attorney should either) a strategy that may not be legal or useful in the future.
The real problem with these seminars is that they are asking healthy people to put all their money in a deferred annuity with the promise that, "Snap, bang, when you need care in the future we throw the switch (to an immediate annuity) and youre on government nursing home benefits!"
What if one of the spouses has died by the time the other needs care? It still may work, no assets, but all the income (now higher because of older age) goes to the nursing home, and if the family wants any remainder money it is put on an unpleasant death wish watch. And some states are already going after these remainder payments in the Medicaid estate recovery process.
